Plus, Bulk carriers consolidate in $2.1B deal
| For December 12, 2023 |  |
| Here's your daily business briefing. - 📈 Inflation eases, wages gain ground
- 📊 Deep Dive: Companies diversify ad revenue streams
- 🛒 Amazon tests grocery subscription
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Thanks! Shriram
p/Shriram | |
| 1 | | The Consumer Price Index (CPI) for the 12 months ending in November slightly decreased to 3.1%, while the Core CPI, excluding volatile components, maintained a 4% YoY growth rate, the lowest since September 2021. Actual average hourly earnings grew by an estimated 0.8% annually in November, marking the eighth consecutive month of growth, and the gradual reduction of inflation provides welcome news for the Federal Reserve and Americans. More: - In line with estimates from economists, the monthly CPI grew by 0.1%, and the core CPI increased by 0.3% from October.
- Gas prices fell 5.8% last month, but shelter prices increased for the second month.
- Inflation has dropped by almost two-thirds from its peak of 9.1% in June of last year, as President Joe Biden recognized progress.
- The Federal Reserve, dealing with inflation through rate hikes, will likely keep the benchmark rate unchanged, with Chair Jerome Powell urging patience.
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What the numbers say: American ad revenue from "retail media" is expected to soar to $46.4B this year, a 50% rise from last year. A surge in ad-related ventures across diverse industries, including major streaming platforms like Netflix and Disney, is marked by the phrase "Everything is an Ad Network," emphasizing widespread advertising channels. Companies leverage shopper data, especially post-Apple privacy policy changes, for enhanced online ad targeting and measurement. Relevance: The shift toward advertising is driven by the potential for higher revenue, discounted services, and the need to compete with successful ad businesses like Amazon. Retail media, projected to generate $46.4B in U.S. ad revenue this year, is a lucrative avenue. It connects ads directly to sales, with companies like Walmart and Best Buy utilizing in-store elements for ad delivery. More data: Ad-supported streaming services are priced lower, attracting more users. Walmart's advertising business grew by 30% to $2.7B, yet about 70% of U.S. adults feel bombarded by ads, indicating potential challenges. | | | |
| 3 | | Amazon is piloting a $9.99 monthly grocery subscription for Prime members in Columbus, Ohio; Sacramento, California; and Denver. The service offers unlimited free delivery for orders over $35 from Amazon Fresh and Whole Foods Market and unlimited 30-minute pickup regardless of order size. More: - The goal of the pilot program is to provide a best-in-class shopping experience and increase Amazon's footprint in the grocery market.
- Amazon highlights the idea of a "one Amazon relationship," using the membership program to link its different services and supermarket brands.
- The company is conducting trials to improve consumer purchasing speed, affordability, and convenience.
- The recent decision by Amazon to do away with the need for a Prime membership to receive free grocery delivery and pickup from Amazon Fresh locations is the inspiration behind this endeavor.
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| 4 | | The $2.1B all-stock merger between Star Bulk Carriers and Eagle Bulk Shipping will make the combined company the fourth-largest commodities carrier in the world and increase its attractiveness to significant investors. Star Bulk shareholders will own 71% of the combined entity, and Eagle Bulk shareholders will own 29%, with the deal expected to close next year. More: - A vital participant, Oaktree Capital Management, supported the action by selling its 28% interest in Eagle Bulk and cutting its investment in Star Bulk from 25% to about 7%.
- The merger solves the problem of shipping businesses' market capitalizations being less than $1B, frequently making it difficult to attract investors.
- Daily freight charges for the most significant dry bulkers have climbed from $10,000 to over $40,000 due to China's increasing restocking of commodities.
- The new company wants to compete more against big competitors like China's Cosco by reducing operating expenditures through economies of scale.
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| 6 | | Statista data shows the second-hand and resale apparel market is projected to reach $351B in 2027, nearly doubling from an estimated $177B in the previous year. Zara plans to expand Pre-Owned, its second-hand platform, to 14 countries, enabling consumers to sell, repair, and donate Zara garments, while H&M will introduce Rewear, a platform facilitating the buying and selling of pre-owned clothes from any brand. More: - German online fashion retailer Zalando has seen increased demand since introducing a used goods section to its website the year before.
- Major retailers entering the second-hand market increase competition, which could be advantageous for specialty dealers of used clothing.
- The growth of the second-hand fashion market is ascribed to consumer demand, environmental concerns, and the fashion industry's endeavors to tackle waste and sustainability objectives.
- Analysts point out that the second-hand fashion market has limited short-term profitability despite the notable expansion.
- Furthermore, analysts say retailers' revenue from second-hand operations may only be minimally viable because of commission earnings on lower-value products.
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| 7 | | Quick Hits: - Want to master Kubernetes? The Kubernetes Cookbook is a must-have guide to discover guidance on cloud architecture analytics, optimization, governance, and more.*
- Hasbro is set to eliminate 1,100 jobs as it grapples with declining toy sales, following a previous round of around 800 job cuts earlier this year.
- Casgevy, the first CRISPR-based gene-editing treatment, has received FDA approval for treating sickle cell disease in the United States, benefiting approximately 100,000 Americans.
- Vice Media's CMO, Nadja Bellan-White, is leaving to become CEO at SS+K, a firm serving clients like Meta and President Biden's inaugural committee.
- Zara withdrew an advertising campaign following criticism for its alleged resemblance to scenes of death and destruction in Gaza.
- Bestselling book on alternative investing offers the first chapter free for a limited time. "Money Shackles" innovates the way you think about money.*
*This is a sponsored listing. | | | |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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